Paving the Way for Buses
The Great GM Streetcar Conspiracy
By Guy Span
(First published in Bay Crossings magazine, April 2003, Volume 4, Number 3)
(Return to Salt Lake City Street Railways Index)
Part I - The Villains
Almost everyone accepts that GM plotted to buy up some transit companies and replace streetcars with new GM buses. This is considered the "Great Transportation Conspiracy" that finally ended up as a subplot in the cartoon hit "Who Framed Roger Rabbit?" (and the main plot of a PBS docu-fictional entitled "Taken For A Ride"). Did GM actually buy electric traction companies and replace streetcars with buses? You betcha. Was it an illegal conspiracy to destroy streetcars? The United States government said no and acquitted the participants on that charge.
So who were the real heroes and villains in this story? One of the most recent villains is Bradford C. Snell, a researcher whose delusions of paranoia seem nearly limitless (at least in print). His 1974 report to the U.S. government was entitled "American Ground Transport–A Proposal for Restructuring the Automobile, Truck, Bus and Rail Industries." In it, he says his report "... demonstrates ... General Motors to be a sovereign economic state whose common control of auto, truck, bus and locomotive production was a major factor in the displacement of rail and bus transportation with cars and trucks."
Snell's 1974 report goes on to craft a plausible case for a vast conspiracy to destroy clean, economic, and user-friendly streetcars with ugly, smelly, and uneconomic buses so more people would buy cars. But there's more! He also finds GM guilty of building diesel locomotives to eliminate electric freight railways and run up the operating expenses so more railways would either go bankrupt or raise their rates, thus benefiting the truckers (who would buy GM trucks). Snell's report also accuses GM of collaborating with the Nazis during the war, defeating honest research into petroleum alternatives such as steam, steam turbine, and electrics. In fact, according to Snell, transportation in the modern 1970s was in such bad shape and so lacking in alternatives because of the machinations of GM.
To set this piece in its proper time frame, it is necessary to understand that this was an era of oil shortages, big gas guzzling cars, bankruptcy of nearly all the major northeastern railroads, the takeover of long-distance rail passenger services by a quasi-governmental agency (Amtrak in 1971), and a time when only five cities in the country still retained streetcars. Snell set out to connect all the dots with little regard for the facts. It was a good story, so he told it and in turn did a major disservice to the history of transportation in America.
While the breadth of Snell's inaccuracies is too large to deal with here, it must be pointed out that inside each there was usually a kernel of truth. Some were just patently false. For instance: "The New Haven's (railroad) replacement of its electric locomotives with GM diesels generatedhigher operating...expenses and substantial losses in passenger and freight revenues. During 50 years of electrified operation, it had never failed to show an operating profit."
The inconvenient facts: The New Haven was in bankruptcy from 1937 (the last year it could afford to buy newly-built electric locomotives) to 1947. By the time diesels rolled around, the New Haven used them to replace older and less efficient steam engines. Contrary to Snell's implications, it retained electrification of its main line from New Haven, CT, to New York City, and under New York City law, all its passenger trains operated into the city using electricity. The New Haven Railroad reentered bankruptcy in 1961, not because it bought GM's diesels, but because its franchise required operating lots of money-losing commuter and passenger service.
So for Snell, the New Haven was a microcosm of all railway profitability and the cause for it all was GM using its traffic muscle to foist off GM diesels on railroads that might have considered other alternatives. (Snell alleges railroads were forced to buy the diesels or lose GM's significant freight business.) With railroads in trouble financially, they were offering poorer service at higher rates making trucking more successful. And the truckers would buy from GM. In Snell's mind (and no where else), it was all a plot.
The next worst piece of revisionist history that Snell offers up is the motorization of New York City streetcars. Like the New Haven story, we find a gram of truth amid all the outrageously misleading claims. According to Snell, GM's ownership of New York Omnibus in 1926 paved the way for the elimination of the surface transit lines. According to Snell, "At that time, as a result of stock and management interlocks, GM was able to exert substantial influence over (New York) Omnibus. John A. Ritchie, for example, served as chairman of GM's bus division and president of Omnibus from 1926 to well after motorization was completed."
This is all true. But what did it have to do with the "busstitution" of New York's transit lines? As it turns out, nothing. GM was simply moving in on a situation where it could sell some buses. The real villain of this piece was a Tammany Hall hack mayor, John F. Hylan, supported by the Hearst Papers. William Randolph Hearst had been supporting a populist campaign against the so-called "Traction Trusts" for years and his crony was probably just following orders. According to Zachary Schrag, author of "The Bus is Young and Honest," Hylan had been fired from the Kings County Elevated in 1897 (for studying law on the job) and had his own personal animosity toward the transit companies.
At that time, there were a number of independent transit companies operating on the surface streets. By the 1920s, they all had one thing in common–a five-cent fare that didn't pay the bills and the lingering public animosity stirred up by the Hearst paper. And the bills were extraordinary. In a scene soon to be repeated across America, these lines were struggling to pay special franchise taxes, pay for their own snow removal, and pay to repave the street to eight feet outside their tracks–all legacies of the horse car days.
Any appeal to Mayor Hylan was rebuffed. Bankruptcy and receivership didn't help. In 1923, Gerhard Dahl, president of the reorganized B.M.T., published "Transit Truths" to gain some public sympathy. Dahl's words serve to highlight the relationship between transit and Hylan: " ... the B.M.T. has met with the bitter, personal and unfair opposition of Mayor Hylan." And from a letter to Hylan: "For seven years, you have been misleading and fooling the people in this community... For seven years, you have blocked every effort at transit relief. You, and only you, are to blame for the present...deplorable condition of the whole transit situation. You have used the transit situation as a political escalator. You have been willing to sacrifice the comfort, the convenience and even the necessities of the people of this community to your selfish political interests. You are persisting in that course." Unfortunately, this broadside changed nothing.
Finally in 1924, New York Railways gave up and offered to rip up some 46 miles of tracks and substitute busses. NYR was hoping to avoid upcoming paving costs and perhaps get around the 25-year-old nickel fare. Hylan made them eat crow and admit that buses were superior to electric traction. After that, it was just a question of when the buses would arrive.
Note that this all occurred years before GM had any involvement in New York City. So when GM arrived on the scene, a political battle had been fought and lost by electric traction. Since New York was the most modern city in America, this one change would help create the mindset that streetcars and rapid transit were old and inefficient. Certainly GM worked assiduously to support the concept that buses were "modern" and in particular, to control three of the five independent operating companies. In turn, this control would be used to influence the type of buses purchased.
Snell's report completely misses a critical juncture in history. Rather than dreaming up a scheme to replace traction with buses, GM was introduced to such a concept by the arch villains Hylan and Hearst. As a result, by 1933, the first Manhattan line was converted to buses and except for the Third Avenue Railway (which hung on until 1946) the last was converted in 1936. New York City finally achieved its "modern" buses and despite the efforts of the electric traction industry, the rest of the country would soon follow suit.
Snell's report can also be misleading (apparently intentionally so). Snell says, "In 1940, GM, Standard Oil and Firestone assumed an active control in Pacific (City Lines)... That year, PCL began to acquire and scrap portions of the $100 million Pacific Electric System (of Roger Rabbit fame)." This statement implies that PCL was getting control of Pacific Electric, when in reality, all they did was acquire the local streetcar systems of Pacific Electric in Glendale and Pasadena and then convert them to buses. Many superficial readers jump on this statement as proof that GM moved in the Red Cars of the Pacific Electric. The ugly little fact is that PCL never acquired Pacific Electric (it was owned by Southern Pacific Railroad until 1953).
Thanks to the Snell report, we now have the makings of a good controversy. Many researchers blindly quote Snell, passing his paranoid, incorrect, and misleading research off as fact. Penny Mintz, who as a student wrote an article for the New York University Environmental Law Journal (1994), fell into this trap and quoted Bradford C. Snell nine times. On the Web, one can find seventeen papers accusing GM of conspiracy based upon Snell's mendacious imaginings (not including one in Polish and another in French). Interestingly enough, four papers ignore Snell and use other evidence to point to a conspiracy, most notably an excellent article by Al Mankoff. Five others take Snell to task and prove there was no conspiracy, including Professor George Hilton's thoughtful article in Transportation Quarterly 51, No.3. The Snell report is even the basis for the PBS movie "Taken For A Ride," which does indeed live up to its title.
Competent scholars are outraged at the abuses in Snell's report and are happy to expose its nature. Once arguing against Snell, they find themselves firmly in the non-conspiracy camp. Pro-conspiracy theorists rely on Snell and look like idiots. Thus it appears as if Snell's work is more effective at polarizing opinions (generating heat) than it is in adding any light. If someone wants a real conspiracy theory, how about Bradford Snell in the pay of GM to make up preposterous stories so a real conspiracy would be overlooked?
(Part II will look at what GM actually accomplished with National City Lines (and others), examine the handicaps of streetcars, and introduce you to one of the heroes in this story -- Jay Quinby.)
Part II - The Plot Clots
In Part I, we found that General Motors (GM) was introduced to the concept of buying up transit and replacing it with "modern" buses thanks to the animosity towards transit of New York Mayor Hylan and newspaper owner William Randolph Hearst back in the 1920s. In 1974, Bradford C. Snell presented a paper to the Senate Judiciary Committee accusing GM of collaborating with the Nazis, wiping out electric railways, bankrupting the rest (to sell more trucks), buying up streetcars to replace them with smelly buses (that people wouldn't ride so they would buy cars) and in general being completely responsible for the miserable state of modern transportation. Because Snell's charges were so obviously erroneous, respected historians and GM were able to laugh them away. Snell's paper served only to polarize opinions and reliance upon its questionable erudition placed most pro-conspiracy theorists firmly on the lunatic fringe where they could be safely ignored.
So let's set the wayback machine to 1933, just as new GM buses are about to show up on the streets of New York. And when they arrived, the reception was generally favorable as the buses could deposit their riders at the curb and not in the middle of the street (at safety islands, like streetcars). The buses were new, clean, and mostly comfortable (if smaller than the streetcars they replaced). For the operators, they came without the baggage of the past including no franchise taxes, no requirement to pave the center of the street, no requirement to remove snow and thus (in an artificially unfair competition) were cheaper to operate. GM invested in three of the New York City operators and they unsurprisingly then selected GM buses.
The year before buses arrived, GM (significantly) formed a new subsidiary, United Cities Motor Transport (UCMT) and looked around to gobble up transit companies to replace its equipment with GM buses. There were only a few smaller systems for sale so GM did indeed acquire them and substitute buses. With so little on the market, UCMT approached the city of Portland, Oregon, in 1933 to replace its streetcar system with buses. However, the voters in Portland said no and UCMT was censored by the American Transit Association for its obviously self-serving role. UCMT operations soon folded up.
Given the handicaps of streetcars with the onerous paving requirements, special franchise taxes, and other burdens, why were not more for sale? The answer is found in the symbiotic relationship the streetcars had with the companies that owned them --the electrical generating companies and some connecting steam railways. The local power company built many of the early streetcar lines. The local generator then sold bulk electricity to the streetcar company and made a nice profit on that sale. If its subsidiary streetcar company could also make money, so much the better. If not, the losses could be covered through a deduction of the utility's federal, state, and local taxes. In a sense, streetcars, through this arrangement, were subsidized.
So until and unless GM could pry streetcars away from their parent utilities or connecting railroads, very few lines would come up for sale. What happened next is the seminal event, the turning point where electric transit met its Waterloo. GM clearly couldn't force the utilities to sell its transit lines, but the Federal Government sure could. And it did, through the passage of the Public Utility Holding Company Act of 1935. This is contained in Title 15 Chapter 2 (c) and it is an incredibly complex law. But it had the suspiciously useful (to GM) effect of stripping transit lines away from their utilities (mandated to be sold by 1938) and forcing them out on their own, to either live or die. And once separated from their subsidies, many died on their own at the end of the depression, without any further assistance from GM.
So for the pro-conspiracy theorists, research into the role played by GM (if any) in the structure of the Utility Act of 1935 would go a long way to show that GM was indeed the "man behind the mirror." In fairness, the utility trusts had cost investors huge sums in the depression era bankruptcies. Indeed, many had perpetuated Enron-type machinations through the complexities of holding companies. The Utility Act would clean up these problems and have the possibly unintended side effect of eliminating rapid rail transit. The government was there to help you and General Motors.
In any event, the Utility Act now put a large number of transit companies on the market. In 1936, GM formed National City Lines and aggressively began to buy transit companies and substitute diesel buses for streetcars. Meanwhile, the transit companies themselves were looking for ways to avoid the extra costs foisted off on them from the days of horse cars. The quickest way was to substitute buses for lighter density lines. Even with the extra costs, high-density lines were still cheaper to operate electrically. Small cities across America began to change to buses. And where GM was not involved, they would buy from Brill, Ford, Mack and even GM.
National City Lines, with partner Firestone Tire and Phillips Petroleum, Atlantic City Lines (with the same) and Pacific City Lines with Standard Oil (replacing Phillips) and Mack Truck added went on to acquire some 62 transit companies and killed streetcars on 23 of them. It also partially eliminated streetcar lines in Baltimore, Los Angeles (city), Oakland, Philadelphia, and St. Louis.
That's the official count of National City Lines and associates. But that is not the full count. Other cities had suspicious investors involved. Most notably, Pacific Electric in the greater Los Angeles basin. PE had been losing money for years and parent Southern Pacific Railroad despaired of ever being able to beg the Public Utilities Commission to let them stop service. The savoir for Southern Pacific was Western Transit Systems, with Jesse Haugh as president.
Haugh was a former official with Pacific City Lines and wandered into town with a $500,000 down payment and $1.8 million in working capital (a considerable sum in those days). But the sale had an interesting structure. Haugh did not buy (he rented) the downtown subway terminal, nor did he buy substations or certain wires or other parts related to electric operations. The rent was not due to start for two years, so he cleverly had a cost structure that forced an apparently reasonable application to the PUC to end rail service. His Metropolitan Coach Company was unabashedly pro-bus. And right away he applied for abandonment of the lines running into the subway terminal.
Haugh apparently had a very friendly relationship with his former employer, Pacific City Lines. Right after his purchase, he needed new buses (to close the Subway Terminal) and the National City Lines subsidiary, Key System, allowed Haugh to purchase its just arrived order (brand new GMs painted for the Key System). These were then sent down to Metropolitan Coach and repainted for service in LA. Given that Haugh had such a cozy relationship with National City Lines, it is fair to say that his financial backers were likely involved with GM (although no one has proven a connection). And Metropolitan Coach bought a lot of buses from GM. It is ironic that one of the frequently misstated "facts" from the Snell Report (Snell implies that Pacific City Lines was buying PE in 1940) may actually have some basis in truth through the affiliation of Haugh.
In 1946 another event occurred which allowed the introduction of one of the few heroes in this story. Meet E. Jay Quinby, a mercurial rail fan, former electric traction employee, retired Lieutenant Commander in the Navy (World War II), and home builder of a battery-powered electric Volkswagen. His contribution to this story was to hand publish and expose the owners of National City Lines (GM, Firestone, and Phillips Petroleum) and he addressed it to "The Mayors; The City Manager; The City Transit Engineer; The members of The Committee on Mass-Transportation and The Tax-Payers and The Riding Citizens of Your Community." In 1946, he sent his 36-page analysis, which began: "This is an urgent warning to each and every one of you that there is a careful, deliberately planned campaign to swindle you out of your most important and valuable public utilities–your Electric Railway System."
Quinby's "manifesto" would go on to link National City Lines (and its subsidiaries) to parent owners Firestone Tires, General Motors, Phillips Petroleum, Standard Oil of California, and Mack Truck. And he delineated how National City Lines bought transit companies and deliberately replaced streetcars and trolley buses with GM diesel buses.
Quinby's arguments went on to detail how and why streetcars and rapid transit were preferable to buses. He pointed out that the supposed advantage of delivering passengers to the curb impeded the flow of traffic (the rear end of the bus stuck out into a traffic lane in practice), eliminated curb parking at the bus stop and that 50% of the passengers would still have to cross the entire street. Streetcars, he noted, behaved predictably and kept to their tracks, letting passengers off at islands and the passengers would only have to cross one-half the street. They used no curb space and carried 60 seated passengers in comfort (with room for 40 more standees) instead of 48 in cramped seats (and standing). Most particularly, he said, they are clean and not emitting poisonous carbon monoxide, which in quantity would render the air unfit to breathe.
Quinby's prophetic words extended to the following: "You will realize too late that the electric railway is unquestionably more comfortable, more reliable, safer and cheaper to use than the bus system. But what can you do about it once you have permitted the tracks to be torn up? Who do you think you can find to finance another deluxe transit system for your city...?"
With almost sixty years of hindsight, we can now answer that question. The taxpayers of the Bay Area funded billions for BART. The Feds (and locals) funded billions and billions for new electric transit systems in San Jose, Sacramento, Los Angeles, Dallas, Washington, D.C., Baltimore, Denver, Portland, and others–all cities whose systems had been unwisely removed. Quinby was right. And more than being right, he tried to do something about it and nearly succeeded.
Quinby's charges would finally bestir the government to begin an investigation into National City Lines and its owners and subsidiaries and suddenly the opposition changed their tactics (in a clear admission of guilt). NCL Subsidiary Baltimore Traction Company quickly bought 165 buses from the Brill Company and Los Angeles Railway bought 40 new PCC streetcars (like the "modern" ones on today's F line in San Francisco).
Thanks to Quinby's warning, the Feds eventually took GM to trial and convicted them not for ripping out streetcar lines, but rather for controlling these companies to monopolize sales of its products, a violation of the Sherman Anti-Trust Act. The participants were each fined $5,000 (plus court costs) and senior executives were each fined $1.00. And that was that. Unfortunately, no one sought an answer to Quinby's most penetrating question (referring to the 1935 Public Utility Holding Company Act), "WHO IS BEHIND THIS CAMPAIGN TO SEPARATE THE OBVIOUSLY ECONOMICAL COMBINATION OF ELECTRIC RAILWAY AND ITS POWER PLANT?"
National City Lines and Pacific City Lines merged in 1948 and continued their practice of "bustitution." Streetcars continued to suffer under the multiple handicaps of special franchise taxes, property taxes on private right-of-ways, paving charges for the center of streets, private snow removal costs, fixed fares, and bizarre rules where, for example, some companies had to provide city lighting along tracks in the street. There was no question that it was harder to make money as a rail transit provider and the bus could use the city-provided streets literally for free.
Yet even in that environment a study of transit systems between 1935 and 1950 by David J. St. Clair found that buses were indeed superior in operating expenses on lighter density lines. Even then, the comparison was not entirely fair, as the older streetcar company provided free transfers to its buses (from streetcars), paid extraordinary charges, and received a single fare regardless of distance traveled. Substituting buses, the transit operator frequently eliminated transfers and instituted a zone system that charged based upon the distance traveled. St. Clair studied the profitability of each system, not rules they operated under. Interestingly enough, he found that trolley (electric overhead wire) buses were the most profitable on medium density lines and electric railways the best on high-density lines. Yet city transit planners chose buses.
City planning was a relatively new field in the 1930s and few accredited institutions taught the subject. However, one such accredited institution did and it was GMI (General Motors Institution which took over the Flint Institute of Technology in 1926). And you can imagine what the fledgling city planners learned: traffic engineering (buses are good; railways are bad). Each year a new crop was turned loose on an unsuspecting country. And dutiful to the education received, they did indeed select modern buses for their towns. To be fair, other institutions (such as M.I.T.) taught city planning, but GM was the only company to buy such a school.
Where the tactics of buying transit, inserting tame planners, and using trained National City Lines stooges failed, GM would act directly. Reportedly, the outgoing Tampa City Council was bribed with Cadillacs to vote to scrap its municipal transit system. Other times, finance leverage was exerted upon companies. According to Freedom of Information Act (F.O.I.A.) documents, the transit system's bank would get a visit from GM promising deposits if the bank would lean on the transit company to not buy more streetcars. Converting to bus was easy, with the local banks assistance and, of course, easy financing from GMAC (General Motors Acceptance Corporation). GMAC was founded in 1919 to help auto dealers finance the bulk purchase of new cars and its role quickly grew.
Allegedly, it was easy money from GMAC that convinced the gangsters in control at Twin Cities Transit to scrap its modern PCC style streetcars (to pocket the scrap sales) and buy buses. The crooked officers eventually were convicted of swindling and fraud, but by then the modern streetcars in Minneapolis and St. Paul were burned for scrap.
While GM was engaged in what can only be described as an all out attack on transit, our government made no effort to assist traction whatsoever and streetcars began to fade in earnest after the Second World War. In 1946, the government began its Interstate Highway program, with lots of lobbying from GM, arguably the largest public works project in recorded history. In 1956, this was expanded with the National Interstate Highway and Defense Act. Gas tax funds could only be spent on more roads. More cars in service meant more gas taxes to fund more roads. And we got lots of roads.
More and better roads doomed the interurban electric railways and they fell like flies. Outstanding systems like the Chicago North Shore Line (which operated from the northern suburbs into Chicago on the elevated loop until 1962) were allowed to go bankrupt and be scrapped. The Bamburger between Salt Lake City and Ogden failed with its high-speed Brill Cars in 1952. Today, arguably only two of the vast empire of interurban systems survived: The Philadelphia and Western Suburban Railway --aka the Red Arrow Lines (now a part of SEPTA) and the Chicago South Shore and South Bend Railway (now state owned). And highways had everything to do with this extinction.
The United States government, state agencies, and local communities allowed these systems to fail. In the District of Columbia, Congress ordered the elimination of streetcars over the strong objections of the local owners and managers. The government was doing its part.
So let's not forget the words of Charlie Wilson when asked if there were a conflict with his former employer (GM) on his possible appointment to Secretary of Defense in 1953. He replied, "I cannot conceive of one because for years, I thought what was good for our country was good for General Motors, and vice versa."
Clearly, GM waged a war on electric traction. It was indeed an all out assault, but by no means the single reason for the failure of rapid transit. Also, it is just as clear that actions and inactions by government contributed significantly to the elimination of electric traction. This was good for GM but not particularly good for our country. E. Jay Quinby and the rapid transit companies lost the war when it mattered and now Quinby's 1946 prophetic question has come back to haunt us: "Who will rebuild them for you?"
Contact Guy Span at guyspansd (at) hotmail.com